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KBW PresentationSeptember 2005

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Safe Harbor Statement This presentation contains forward-looking information about United America Indemnity and the operations of United

America Indemnity that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of the transactions, and statements about the future performance, operations, products and services of the companies.

The business and operations of United America Indemnity is and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: (1) the ineffectiveness of United America Indemnity's business strategy due to changes in current or future market conditions; (2) the effects of competitors' pricing policies, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products; (3) greater frequency or severity of claims and loss activity than United America Indemnity's underwriting, reserving or investment practices have anticipated; (4) decreased level of demand for United America Indemnity's insurance products or increased competition due to an increase in capacity of property and casualty insurers; (5) risks inherent in establishing loss and loss adjustment expense reserves; (6) uncertainties relating to the financial ratings of United America Indemnity's insurance subsidiaries; (7) uncertainties arising from the cyclical nature of United America Indemnity's business; (8) changes in United America Indemnity's relationships with, and the capacity of, its general agents; (9) the risk that United America Indemnity's reinsurers may not be able to fulfill obligations; and (10) uncertainties relating to governmental and regulatory policies. The foregoing review of important factors should be read in conjunction with the other cautionary statements that are included in United America Indemnity's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as well as in the materials filed and to be filed with the U.S. Securities and Exchange Commission (SEC). United America Indemnity does not make any commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.

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UAI Overview

We Measure Success in Terms of Growth in Book

Value as We Believe This is the Best Means of

Delivering Superior Returns to Our Shareholders.

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UAI Overview

• We Maximize Growth in Book Value By:

– Operating Strategies Predicated on Competitive Advantage

– Preserving the Strength of our Balance Sheet

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UAI Overview

• Operational Strategies

– Emphasis on the Small E&S and Specialty Lines Market

– Offering Proprietary Products

– Create Franchise Value for Producers

– Benefits of Penn-America Acquisition

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UAI Overview

• Financial Management Strategies

– Conservative Investment Portfolio

– Prudent Loss Reserving Practices

– Management of Reinsurance Receivable

– Capital Management Strategies

– Benefits of Penn-America Acquisition

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Operating Strategies/Competitive Advantages

• Operate in E&S/Specialty Segment

– 70% of Premium Written on Surplus Lines Basis

– Freedom of Rate and Form

– Average Premium Size Yields Competitive Insulation

– Commercial Binding Authority – Efficient Distribution and Infrastructure

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Operating Strategies/Competitive Advantages

• Offer Proprietary Products to Niche Markets– Segment Focused Products Developed In-House

• Commercial Binding Authority– Habitational– Non-Residential Artisan Contractors– Restaurants– Retail Stores

• Miscellaneous Professional Liability• Umbrella & Excess Liability• New Products

– Real Estate Agents E&O– Lawyers E&O– Allied Health Care

– Single Producer Niche Products• Social Service Agency Liability Business• Southern California Chiropractors• Equine Mortality

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Operating Strategies/Competitive Advantages

• Create Franchise Value For Producers

- Semi-Exclusive Agency Appointments – 140 Current Appointments

- Technology Centered on the Agent

- Access to CEO/Senior Management

- Long Term Partnership With Producers

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Operating Strategies/Competitive Advantages

• Acquisition of Penn-America

- Expanded and Complemented Our Producer Base

- Brought Additional Outlets for Newly Developed Products

- Extremely Profitable and Stable Portfolio of Business

- Added Fee-Based Revenues From Penn Independent Corporation, Our Wholesale Broker

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6 0 %

7 0 %

8 0 %

9 0 %

1 0 0 %

1 1 0 %

1 7 0 %

1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4

U n i t e d N a t i o n a l P e n n - A m e r i c a In d u s t r y A ve r a g e

Historical Underwriting Performance S

tatu

tory

Co

mb

ine

d R

ati

os

• Strong Underwriting Performance:– UNG has a 94% combined ratio for the last 20 years – PNG has a 98% combined ratio since public (1993)– P&C industry average is 108%

Source: Company reports, A.M. Best.Note: Statutory combined ratio. In 2002, UNG increased net loss reserves relative to accident years 2001 and prior by $47.8 million primarily due to higher than

anticipated losses in the multi-peril and other liability lines of business and by $23.6 million due to the conclusion of an arbitration proceeding. The net losses and loss adjustment expenses ratio increased by 43.9 percentage points in 2002 due to this $71.4 million increase in net loss reserves. 2003 is adjusted for certain expenses related to the acquisition as well as other one-time costs. United National 2004 reported on GAAP basis to incorporate offshore operations.

P&C Industry

Average: 108%

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$ 0

$ 5 0

$ 1 0 0

$ 1 5 0

$ 2 0 0

$ 2 5 0

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

• PNG Compound Annual Growth Rate of 20%

• UNG Compound Annual Growth Rate of 21%

Operating Strategies – Growth In Net Written Premium

81%

PNG Net Premiums Written

$ 0

$ 5 0

$ 1 0 0

$ 1 5 0

$ 2 0 0

$ 2 5 0

$ 3 0 0

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

UNG Net Premiums Written

21% CAGR($

in M

illio

ns)

($ in

Mill

ions

)

20% CAGR

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$ 7 .2

$ 1 1 .6

$ 1 4 .5

$ 1 8 .2

$ 7 .8

$ 0 . 0

$ 4 . 0

$ 8 . 0

$ 1 2 . 0

$ 1 6 . 0

$ 2 0 . 0

J u n 0 4 S e p 0 4 D e c 0 4 M a r 0 5 J u n 0 5

• Growth in Operating EPS:– Continued Strong Underwriting

Performance at UNG and PNG– Increased Retentions– Strong Growth in Investment

Income

• Net Operating Income Growth:– Growth in Underwriting Profit– Business Combination– Growth in Investment Income

• Putting excess cash balances to work

• Positive cash flow from operations - $39 million for Q2:’05

NET OPERATING INCOMENET OPERATING INCOME

Note: All Financial Information is UAI “As Reported”. Operating Earnings Per Share Calculated on a Diluted Basis.

133%

UAI – June 2005 Financial Results

OPERATING EARNINGS PER SHAREOPERATING EARNINGS PER SHARE

$ 0 .2 5

$ 0 .4 0$ 0 .4 2

$ 0 .4 9

$ 0 .2 7

$ 0 . 0 0

$ 0 . 1 0

$ 0 . 2 0

$ 0 . 3 0

$ 0 . 4 0

$ 0 . 5 0

$ 0 . 6 0

J u n 0 4 S e p 0 4 D e c 0 4 M a r 0 5 J u n 0 5

81%

($ in

Mill

ions

)

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• Growth in Underwriting Income:– Business Combination

– Growth in Net Earned Premium

– Consistent Underwriting Margins

• Excellent Underwriting Results– Continued Actuarial Pricing Discipline

– Focus on Areas of Underwriting Expertise

UAI – June 2005 Financial Results

GAAP COMBINED RATIOGAAP COMBINED RATIO

Note: All Financial Information is UAI “As Reported”

9 5 .8 %

9 1 .0 %9 2 .8 %

9 0 .4 %9 0 .6 %

6 0 . 0 %

7 0 . 0 %

8 0 . 0 %

9 0 . 0 %

1 0 0 . 0 %

J u n 0 4 S e p 0 4 D e c 0 4 M a r 0 5 J u n 0 5

$ 2 .5

$ 5 .8

$ 7 .4

$ 1 1 .5

$ 5 .6

$ 0 . 0

$ 3 . 0

$ 6 . 0

$ 9 . 0

$ 1 2 . 0

J u n 0 4 S e p 0 4 D e c 0 4 M a r 0 5 J u n 0 5

105%

PRE-TAX GAAP U/W INCOMEPRE-TAX GAAP U/W INCOME

($ in

Mill

ions

)

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Total Portfolio $1.320 Billion

Mortgage Backed 17.1%

Options0.3%

Tax-exempt31.2%

Treasuries7.3%

Limited Partnerships

3.9%

Equities4.8%

Corporate 16.2%

Cash & Short Term

Investments11.7%

Callable Agencies

7.4%

Fixed Income Portfolio By Rating

AAA74.7%

AA12.1%

CC0.1%

B0.1%BBB

1.7%

BB 0.3%

A11.1%

Financial Management Strategy - Balance Sheet Strength

• Conservative Investment Portfolio

- Value of Portfolio at June 30, 2005 - $1.32 Billion- Broadly Diversified Asset Mix

• 91% Cash and Fixed Income Securities

• Integrated with Tax Strategy

- Credit Quality – AAA/AA- Duration of Fixed Income Portfolio – 3.78 Years

Note: As of June 30, 2005Excludes Payable/Receivable for Securities

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Financial Management Strategy - Balance Sheet Strength

• Loss Reserving Philosophy

– Our Policy is to Always Reserve At or Above the Actuarial Point Estimate

– 3 Tiered Process:• UAI Actuary• Independent Outside Actuary• PWC

– Unique in Having Independent Actuary Review Gross and Net Reserves Every Quarter

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A++10.2%

A+21.7%

A64.6%

A-0.7%

B++ and Lower2.9%

Financial Management Strategy - Balance Sheet Strength

• Management of Reinsurance Receivable

– Total Reinsurance Receivable, net of Collateral, is $733.0 Million at 6/30/05

– $695.8 Million of Irrevocable Collateral Held by UAI

– 97.1% of Net Receivables are from Reinsurers Rated “A-” or Higher (by A.M. Best)

– Net Exposure to B++ and Lower Reinsurers, is $22 Million. All Reinsurers Paying With No Active Disputes or Arbitrations

Credit Quality of Reinsurers

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Financial Management Strategy - Balance Sheet Strength

• Management of Reinsurance Receivable Resulting in Continuing Reduction in Reinsurance Leverage.

6.5xGross &

Net

2.7xNet

2.4xNet

2.2xNet

1.9xNet

1.4xNet

1.2xNet0

1

2

3

4

5

6

7

8

Dec 02Gross & Net

Dec 03 June 04 Sept 04 Dec 04 Mar 05 June 05

Net Reinsurance Receivables / GAAP EquityNet Reinsurance Receivables / GAAP Equity

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Financial Management Strategy - Balance Sheet Strength

• Capital Management Strategies

– Offshore Operations – Wind River Insurance Company (Bermuda)

• Provides Regulatory Flexibility• Creates Tax Efficiencies• Writes Third Party P&C Risks• Reinsures UNG/PNG via Intercompany Treaty

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Financial Management Strategy - Balance Sheet Strength

• Acquisition of Penn-America

- Immediately Accretive to Book Value Per Share and Earnings

- Reduced Reinsurance Leverage

- Similarly Conservative Balance Sheet

- Enhanced Capital Management Flexibility

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• Growth in Cash and Invested Assets:– Increase in Net Premium Written

– Increase in Operating Income

– Business Combination

• Increase in Net Loss Reserves:– Premium Growth

– Business Combination

Note: All Financial Information is UAI “As Reported”.

UAI – June 2005 Financial Results

$14.73

$15.30

$16.09

$16.87

$401.00

81%

Cash & Invested AssetsCash & Invested Assets

116%

$611.1

$848.3$924.3

$1319.9

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

Dec 2002 Dec 2003 Dec 2004 June 2005

$ 2 6 0 . 8

$ 3 1 4 . 0

$ 3 4 4 . 3

$ 5 8 4 . 4

$ 7 5 . 0

$ 1 5 0 . 0

$ 2 2 5 . 0

$ 3 0 0 . 0

$ 3 7 5 . 0

$ 4 5 0 . 0

$ 5 2 5 . 0

D e c 2 0 0 2 D e c 2 0 0 3 D e c 2 0 0 4 J u n e 2 0 0 5

Net Loss ReservesNet Loss Reserves

125%

($ in

Mill

ions

)($

in M

illio

ns)

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$ 1 4 .7 3

$ 1 5 .3 0

$ 1 6 .0 9

$ 1 6 .8 7

$ 1 4 .2 1

$ 1 2 . 0 0

$ 1 3 . 0 0

$ 1 4 . 0 0

$ 1 5 . 0 0

$ 1 6 . 0 0

$ 1 7 . 0 0

$ 1 8 . 0 0

J u n 0 4 S e p 0 4 D e c 0 4 M a r 0 5 J u n 0 5

• Strong Growth in Book Value Per Share– Increase in Net Income

– Accretive Nature of Business Combination

• Continued Growth in GAAP Book Value– Net Income

– Business Combination

BOOK VALUE PER SHAREBOOK VALUE PER SHARE

19%

Note: All Financial Information is UAI “As Reported”.

UAI – June 2005 Financial Results

$14.73

$15.30

$16.09

$16.87

$401.00

81%

4 1 6 .5 4 3 2 .6

5 8 5 .06 1 4 .5

4 0 1 .6

$ 0 . 0

$ 1 0 0 . 0

$ 2 0 0 . 0

$ 3 0 0 . 0

$ 4 0 0 . 0

$ 5 0 0 . 0

$ 6 0 0 . 0

$ 7 0 0 . 0

J u n 0 4 S e p 0 4 D e c 0 4 M a r 0 5 J u n 0 5

GAAP SHAREHOLDERS’ EQUITYGAAP SHAREHOLDERS’ EQUITY

53%

($ in

Mill

ions

)

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Summary

• UAI Delivering Strong Growth in Book Value for Shareholders

– Operating and Financial Strategies Aligned

– Excellent Marketing Position

– Competitive Insulation

– Size and Niche Strategies Create Ongoing Growth Opportunities